November 27, 2006

China to become net corn importer 'in a few years'

China would soon become a net corn importer as a result of robust domestic demand from the corn deep processing sector.

The nation's corn exports stood at 2.27 million tonnes in the first three quarters of this year, down 68.3 per cent year-on-year, while imports hit 60,000 tonnes, up 43 times year-on-year, according to statistics from the Ministry of Commerce.

Boosted by rising oil prices, many grain enterprises have built processing facilities in China's major corn producing provinces. The growing capability would drive domestic demand even higher and could turn China into a net corn importer in the coming years, insiders said.

Corn stocks have fallen this year as a result of domestic demand, said an official from the Ministry of Commerce, contributing the change to increasing industrial processing. He however, did not expect the change to happen in 2007 as China's corn supply still exceeds demand.

There are over 10 corn deep processing plants in Northeast China's Jilin province, with a total annual processing capacity of 6 million tonnes, according to Jiang Jianhua, deputy general manager of Jilin-based Jiliang Group.

It is estimated that by 2008, facilities in Northeast China, the country's major corn-producing region, would annually consume around 15 million tonnes of corn.

China is now the third-largest fuel ethanol producer after Brazil and the US. Demand from ethanol makers, sugar producers and feed factories, has exhausted some of the nation's corn stocks. An ethanol producer claimed its employees had to go to over 100 grain depots in Northeast China for their supplies this year.

Jiang said China's exports of corn are unlikely to reach 5 million tonnes in the second half of this year as previously estimated. The nation exported about 8.61 million tonnes of corn last year.

Meanwhile, more enterprises have begun to import corn. In July, a sugar maker ordered 50,000 tonnes of corn from the US. Experts also suggested the Chinese government strengthen its administration of corn processing plants in a bid to avoid major fluctuations in demand and prices.